The Bank of Japan two day monetary policy meeting concludes today. There is no time scheduled for the announcement; expect it sometime between 0230 to 0330GMT.

  • Following the announcement we get a press conference from Governor Kuroda, which will start at 0630GMT

Here is a preview, from Anthony Barton at LiveSquawk. LiveSquawk is a subscription service, but they do make a free trial available and its worth checking out.

All those surveyed by Bloomberg expect the Bank of Japan (BoJ) to stand pat on monetary policy, maintaining the annual rise in monetary base at JPY 80 tln and overnight rate at 0.1%.

Therefore both the BoJ and governor Haruhiko Kuroda are likely to reiterate that they stand ready to do more to help reach the 2% inflation target, but at the moment, the current monetary policy stance remains appropriate.

Last time out the central bank trimmed its real growth and inflation forecasts, but it decided to leave its monetary policy framework unchanged. Following that meeting, economic data has been mixed.

The most recent key release was the Q3 flash GDP print, which once again highlighted the downside risks present in the Japanese economy, dipping by 0.8% on an annualised basis, against expectations of -0.2% (sending Japan back into a technical recession). The recent trend of subdued business spending persisted in the release, with policymakers unable to stir investment despite record corporate profits leading to ever swelling cash piles at businesses, although private consumption modestly beat expectations. Stock building had the largest detrimental effect on GDP, as the output gap widened again last quarter.

Despite the soft GDP release, Capital Economics believe that "recent inflation developments will be enough for the central bank to hold off from further stimulus, with underlying inflation climbing to a fresh high in September," the consultancy sees "little chance that policymakers will respond by stepping up the pace of easing at their upcoming meeting."

Daiwa suggest that "Q3 GDP at face value was disappointing. However, with the decline in Q2 not quite as steep as previously thought, and given the strength of the recovery in Q1, economic output was still 1% higher than a year earlier."

As a result the investment house expects the central bank to "merely to shrug its shoulders. The figures will have likely come in slightly below the BoJ's expectations and add to evidence that its GDP growth forecast for FY15 of 1.2% is overoptimistic. However, the figures were certainly not bad enough to trigger additional monetary easing."

BAML note the trade off the BoJ faces between a soft economic outlook and a weaker yen regarding the implementation of further easing, suggesting that "the recent rise in USDJPY has reduced expectations for easing"

The technical recession has led to Prime Minister Shinzo Abe and his cabinet pointing towards the compilation of a supplementary budget, although it is not seen as a broad economic stimulus package. Japan Macro Advisors suggest that such a move would "help the government win sympathies ahead of the Upper House election next summer, but offer no meaningful boost to the economy."

Looking forwards consensus is for more stimulus from the BoJ, although there is much discussion about the timing and form that such expansionary policy would take.

Capital Economics believe that "with rising slack dampening price pressures, we remain convinced that more monetary stimulus will eventually be needed. The upshot is that the Bank's preferred inflation measure, which excludes prices of fresh food and energy, should start to moderate soon. We therefore remain convinced that more stimulus will eventually be needed, and now believe that the January meeting is the most likely venue for its announcement."

However, the consultancy does concede that "policymakers have shown considerable reluctance to respond to weaker growth with additional stimulus as underlying inflation has accelerated."